Auto worker Ivan Flores spends his days transporting parts for U.S.-bound Audi SUVs at a plant in central Mexico, but he laughs when asked if he could ever buy one of the $40,000 Q5 SUVs the plant produces on his $2.25 per hour salary.

"For us it is a dream to buy a Q5; we never could," said Flores, 40, who supports three sons on his roughly $110 weekly paycheck.

The premise of the auto industry since the times of Henry Ford was that workers would make enough to buy the cars they produced. Across the U.S. and Europe, the arrival of an auto plant meant the creation of middle-class communities, with employees taking vacations, buying homes, cars, perhaps even cottages and boats.

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But in Mexico — where the auto industry has boomed under the North American Free Trade Agreement, NAFTA, ie, with plants like the Audi factory that opened in Puebla state in 2016 — the industry has created something different: a class of workers who are barely getting by, crammed into tiny 500-square-foot apartments in government-subsidized projects that they pay for over decades. Many can't afford even a used car, taking home as little as $50 per week after deductions for mortgages and cafeteria meals.

Why have Mexican auto salaries stagnated or declined while pay for Chinese auto workers rose, despite all the promises that North American Free Trade Agreement would increase Mexican wages? That's the question U.S. negotiators are asking as the third round of NAFTA talks resumes in Ottawa, Canada.

Ironically, U.S. President Donald Trump, widely seen here as one of Mexico's worst enemies, is pressing the issue of low Mexican wage rates, saying labor protections should be strengthened. "It's ironic, right, that he's always criticizing us, but at the same time, he could do something that benefits us, by exposing the rot in the system" said Audi worker Eduardo Badillo, 34.

The key, in Mexico's auto industry, may be the so-called "protection" contracts signed long before plants open. As in many factories in Mexico, very few of the current Audi workers ever voted for their union leader, and they won't get any chance to vote for years.

Government records show that on Jan 24, 2014 — almost three years before the Sept. 30, 2016, inauguration of the Audi plant — the company signed a union contract that specified wages as low as $1.40 per hour, up to $4 per hour. The union says nobody receives the lowest wage, with most earning about $2.25.

So when the plant's 5,000 workers finally were hired two years later, they were faced with a union and a contract only a handful had voted for. Given Mexico's lack of good jobs, many do apply, including college graduates. The contract locks in wage increase of about 6 percent per year — which outpaced inflation for a few years but now trails it — through 2019.

"Everybody knows what the conditions are when they apply. These are the wages, this is the union," said union chief Alvaro Lopez Vazquez. "You decide. If you don't like it, you can look elsewhere."

Lopez Vazquez refused to say how many people took part in the vote when he was elected in 2013; opponents say it was about two dozen. He also said he doesn't plan to call for any voting assembly or meeting until 2020.

"This is a democratic union, where the workers vote ... every six years," he said. Lopez Vazquez and the company say the plant pays above-average wages for the sector. The company said it has paid workers bonuses and respects the union.

A Nissan plant in another state pays between $2.40 and $4.75 per hour. But workers at many other plants also get vouchers to buy groceries, which Audi workers don't. Mexico's minimum wage — which few people make — is about 50 cents per hour.

But the real issue is choice, says former assembly-line worker Juan Carmona, 35, an assembly-line worker who says he was fired for his attempts to call for a union leadership vote. The company denies that, but wouldn't say why he was fired.

Mexico recently changed its constitution to demand that unions signing labor contracts have to show they have the support of the workers they represent. But there has been little to no enforcement. The Labor Department refused requests for comment.

Alex Covarrubias, a labor professor at Mexico's Sonora College, said such "protection" contracts are almost universal in Mexico. "Almost all the labor contracts that are signed in Mexico are unlawful, which means that they are company contracts, which the workers aren't aware of."

Critics have long accused Mexican unions of doing more to control workers than represent them. The country's biggest labor federation forms part of the ruling PRI, Institutional Revolutionary Party.

Low wages — along with closeness to U.S. markets — are the key attractions that have drawn automakers such as Audi, Kia, Mazda, Toyota and BMW to open plants in Mexico over the last couple of years.

Lopez Vazquez, the union leader, noted that other companies pay less than Audi. In March 2016, he said, BMW signed a pre-opening labor contract for its plant that says workers can earn as little as $1.00 per hour, with a maximum of $2.30.

Mexican BMW / SUV Beamer Plant

BMW said in a statement, "Our salary package, the mix of daily wages and benefits, is competitive and is in accordance with the region and the market."

As in the United States, governments have bent over backward to attract plants, offering land, infrastructure and tax breaks. The state of Puebla is even creating a new "model city" on greenfields near the Audi plant, though its new, largely empty apartment blocks are too expensive for most of the plant's workers.

Lopez Vazquez also implied that a compliant union was part of the package of attractions to get the plant in Puebla, saying, "If we hadn't formed this union and gotten this contract, Audi might have gone somewhere else."

"We have a win-win philosophy. If the company does well, everybody does well," Lopez Vazquez said. He said the low level of wages is explained by the differences in the cost of living in Mexico. "We couldn't make what they (U.S. autoworkers) make. We'd be millionaires."

Badillo, the Audi worker, said he'd be satisfied making half the $34 an hour received by U.S. autoworkers. Badillo is typical of the plant's employees. He works in the paint shop, and lives with his son, Alejandro, 13, and daughter Noemi, 11, in a tiny 500 square-foot (47 square meter) government-subsidized apartment that he'll be paying off for decades.

Like many of the Audi employees, he has some college education — he started a bachelors' degree in electronics — and he makes about $120 per week. His wife works in a department store, making less than he does. After paying their mortgage, utilities and taxes, they might have $50 per week to spend on food, entertainment and schools supplies.

Badillo can't afford a car. He takes the company bus two hours to work and two hours back. Alejandro would like an Xbox video game and Noemi would like a tablet, but they know their father can't afford it. Wage rates are so low now that even auto companies from China — where average manufacturing wages rose to $3.60 per hour in 2016— are beginning to set up plants here.

Badillo said the persistence of such low wages makes him fear for the country. "What we don't want to see later is children assembling cellphones, but that's where we're heading," said Badillo. "I don't want to see Mexico like that. I want to see Mexico make progress."

69 comments:

Mexico sucks, the government just steals your money and sells out to foreigners, they don't even want to help on the earth quake in mrxico city! That's why all my family is here in U.S making a better life for ourselv3s

9:42 that's how America was made, people from diferent parts of the world that want a better life. You cannot difend yourselve from a currupt Mexican government. Look what Happened to colosio and Dr. Mireles for standing up to curruption..

$ 2.25 USD a day is very possible,The minimum pesos salary in mexico used to be aboit $2.99 dollars a day, not per hour, but because of devaluation now it is less than 2 dollars a day, mexican may not be communist slave labor, but it is slave, while pretentious leaders cry and cry their eyes out because they got bad NAFTA deals and shit...As some wild evil güeros say "shut the fack up maderfackers" about bad deals.

4:11 same as on the US, some mexicans say if the ol bag wants to eat she should go and sell cans, the junk yard is open all day, and the kids can help, it is never too early to start learning good work ethics. The worker's family is his problem a yway, the transnationals are not there to redeem the mexican people, they are only there to make fast bucks, sorry, and 2.25 dollars is A DAY, MINIMUM WAGE, if you went to college you may deserve 5.00 USD A DAY, engineers make about 15 dollars A DAY, after the devaluation s epn brung to save mexico, it helps him save a lot of money when he sells his stolen peisos for dollars, while everybody loses their ass, because banks will not let cualquier cabrón buy dollars at any price.

Actually it would not stimulate the economy.. Take a look at low wages in U. S. With min. Wage u cant afford 2 rent. Im from California.. N if u increase min wage look at Washington state ull end up loosing a lot of businesses small companies go bankrupt n only the giant walmart costco amazon will take it all.. N even then they will have to fire or not hire 2 many ppl to makw income.. Capitalism is not what it really is.. In all countries the riche get richer n da poor gets the left overs..Hey at least in Mexico that min. Wage includes Housing (infonavit) n health care (Seguro Social).. Its the same all over the world

poo mista badillo, nobody cares what he wants/ but the donal' also pays his wet back workers half the minimum wages, provides no safety equipment and his victims must sue and accept settlements and confidentiality agreements with half what they were owed

Just like the factories around the border towns . They did nation wide advertising of jobs to get a bunch to migrate north to the border . Then they cant get a living wage . Living in plywood shacks with waterhoses running from one to another . Theyre just stuck there . That's one reason there is no shortage of drug mules.

8:17 Those plants will never come back, they have bought and paid all the complicity they needed on the US and in mexico, and more are leaving, even the donal's best friends, only the donal is not offshoring his companies, they were born offshore

While Mexico may not pay very much in wages that's the reason Mexico is paying dearly through piso, extortion, kidnappings and high crime. I'd be willing to bet the union leaders get big bribes under the table to keep the mass labor workers satisfied an quiet so to speak. These low wages are what keeps the Mexican people going north looking for a better life and better pay. If Mexico and the USA looked for ways to improve the pay and quality of life in Mexico governments wouldn't have to worry about illegal immigration into the USA. But the USA pretends not to know or notice this so that the large donations from the car manufacturers continue their flowing of money into the American and Mexican politician's campaign coffers and perhaps bank accounts. It's screw the little guy way of thinking amongst the politicians.

American unions here are few and not fighting for workers rights ither. Only a small percentage of unions are strong and effective to guarantee workers agendas.Lobbyists and politicians usually get their way when interests of profits are at issue.The era of strong unions have become a thing of the past.

This is a complete tragedy that these bastard companies are making millions while these poor people can barely afford to put food in their mouths. I hope to God that these bastards burn in hell for paying this kind of money to these people.

9:17 first your all american corporations, disappeared real union leadership and installed their own yes men, then they offshored their corporations with government subsidies while promising the american workers they would be better off when the US economy improved the trickle down, hehehee

I don't think that's the point of the article. The CEOs are getting rich on the backs of those folks. Like everywhere else, but worse in Mexico. They deserve decent pay for hard work, too. BMW is all about saving pennies any way they can.

After reading this, can you really blame people for growing weed or amapola to make ends meet? Can you blame the crooked police for playing both sides? I don't agree with stealing, kidnapping or extortion but growing a crop that goes for 50 bucks a pound as opposed to beans that for for 15 cents a pound is only common sense. It's impossible to live on Mexico's minimum wage. El que no hace tranza, nunca avanza.

That's always been an issue for citizens living in Mexico. A conflict of interest for those with moral and ethical values. Do you feed your family today or engage in some form of economic activities to continue to house and feed loved ones. However, the latter choice often result in a perilous one.

4:58- would u rather be the test pilot for a Mexican jet liner manufacturer or boeing? U think the guy makin $30 an hour cares a little more than the guy makin $2.50 an hr when tightening down important bolts, etc? Lol

I live Tamps. People only make enough to buy food. I am retired and live well American companies are making good money. If people want to protest wages they are fired. I wish the NFL could play football in Mexico and make .50 a hour. They r so Spoiled. U.S. people live a good life. American companies r staying in Mexico.

Of course American companies like other foreign countries who have business in Mexico, prefer profits!Business sense is clearly evident. Wages are more acceptable to those who continue to make fortunes.

@ 7:51Think monetary salaries are not at question here.Rather Freedom of Speech! Our civil liberties are a cause for concern!Such rhetoric remarks from a world leader should have been checked. Moreover, the flagrant disrespect to those with comments of "Son of Bitch". God bless America!

4:58 the NFL players use their liberties, no 5 time draft dodger is going to make them not kneel, hold each other arms or protest america's racism any way they see fit, americans did not go to war for have 5 time draft dodging degenerates forcing their special brand of alternate citizenship on pepole that kill each other on the field for their "million dollar paycheck", police officers lock lips to the promises made to them to invest their pension funds in towers and casinos" all of them are at risk, their benefactor always screws his investors, there is no other way, sorryyyy!

These are good paying and stable jobs, according to labor leaders and politicians. This is part of the reason why so many turn to illegal activities or make the struggle to cross into the USA and make a living wage. Every American company that leaves the US to manufacture in Mexico should be charged a high tariff to import their product.

Dear Cesarito, no import tax, the dogs are hungry, but they took care of that right from the start, they did not pay tax to i.port Cocaine, mariguana, heroin, meth, precursors or 80% of the pharmaceuticals the american people consume, much of it viagra and Oxies for the pain of rejection, nobody wants to have sex with crazy animals on yombinas and spanish fly.

Now ask how much the company has to pay in piso, and how many of their cars are stuffed with drugs before heading north...

Getting mad at the company is all well and good, but the "union" is really just another protection racket more than likely associated with the cartels. I wouldn't be surprised if the union leaders were actually front men whose only purpose is to make sure the cartel gets their piso for every vehicle made.

Really, the cartels are still the root of Mexico's problems, as long as people idolize them and clamor to join them nothing will change. There is no reason to turn things around as a police officer or politician; you get paid a bunch of side money to be corrupt AND you don't end up dead.

"K-B Toys" a story that should be known by all americans, no mexicans facked them and their investors, the Cocaine Cowboys that invested some of their ill gotten gains and stuck it up their arses did.--GOOGLE may still have the story free, google, KB

2:07; Your comment is about the most ludicrous I've seen here in a while. Do you even know a damn thing about Mexico other than the bad shit you seek out to read? "Car bosses should be shot" - damn!Dwight

I disagree with bias of article. Is article to say the Mexican workers would be better if these jobs were not here? Minimum wage in Mexico is $80 MXN per hour ($4.44 USD per hour) and the international company jobs from Japan, USA, Europe pay the workers above the table (not efectivo) and foreign company pay the employee Seguro Social (IMSS) for their insurance medical, insurance to pay employee if they get hurt and can not work, pension when employee is too old, and other benefits like infonavit to help employee with credit to buy a house. I know many people who work at GM factory close to Leon including son of the manager at my shoe factory and he's son started GM in maybe 1998 with no skill making little money and now he speaks inglish, works as administrator and makes very favorable salary and he has good position. International company manufacturing is good for Mexico. The companys follow the labor laws better than many Mexican companies who only pay under table and give administration jobs to family and friends.

Having employed personnel in Mexico, Europe, and primarily the United States I can attest to all CDM described and add also that by law (when legally employed and not under the table as CDM differentiates) Mexican employees have more mandatory paid holidays, Mexico's labor laws have mandatory raises based on time employed starting at 13 months (regardless of performance), and it is also a longer term liability after you fire or layoff an employee in Mexico, so the decision to hire someone in Mexico is riskier for the employer than in the United States (or at least the "right to work states" where I've employed people). NOTE: The biggest problem is that slightly over 50% of the people working in Mexico are employed in the grey market (or as CDM says under table; paid in cash). I agree with CDM that all of these foreign jobs are better opportunities than most grey market jobs that over 50% of the Mexican workforce is employed in.

7:58 Yaqui - Its very refreshing to read your gratitude and thanks after a post. There seems to be an obvious correlation between civil comments and feedback like yours vs. the posts that engage in name calling, and false generalizations always eager to criticize anything relating to Mexico. :)

It is easy to kiss ass and bend over when you are not being victimized by the lesser damaging options in the global capitalist arsenal, whatever the parasite companies spend they take back by misapropriating "by any means necessary" the host nation's natural resources, soft coup d'etats is their favourite means of attack...these days hacking elections all over the place is another, if they must get help from russians or some 400 guy in his bedroom it's OK...

People should sell their shit where they make it, and trade a bit of it around, not expropriated it as ship it away offshore to some tax heaven and bring their wares back to stick up their former employees arseholes.

But the cost of living is much lower in Mexico than it is in the United States. You can still find unfurnished, barebones studio apartments for rent in Mexico for the equivalent of 100 U.S. dollars a month.

And families in Mexico tend to live together, often in homes the family has owned outright for a while, with no overhead mortgage to pay each month. With a full time job at an auto manufacturer, the employee and immediate family are probably covered under Mexico's free national healthcare... So there are far fewer monthly expenses as opposed to the United States where everything costs outrageous amounts of money.